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Industry Effects of Monetary Policy: Evidence from India

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  • Ghosh, Saibal

Abstract

The study exploits 2-digit level industry data for the period 1981-2004 to ascertain the interlinkage between a monetary policy shock and industry value added. Accordingly, we first estimate a Vector Auto Regression (VAR) model to ascertain the magnitude of a monetary policy shock on industrial output. Subsequently, we try to explain the observed heterogeneity in terms of industry characteristics. The findings indicate that (a) industries exhibit differential response to a monetary tightening and (b) both interest rate and financial accelerator variables tend to be important in explaining the differential response.

Suggested Citation

  • Ghosh, Saibal, 2009. "Industry Effects of Monetary Policy: Evidence from India," MPRA Paper 17307, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:17307
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    References listed on IDEAS

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    Cited by:

    1. Singh, Sunny Kumar & Rao, D. Tripati, 2014. "Sectoral effects of monetary policy shock: evidence from India," MPRA Paper 62069, University Library of Munich, Germany.

    More about this item

    Keywords

    industry; monetary policy; interest rate channel; financial accelerator; vector auto regression; cross section regression;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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